1) Opponents of free trade often argue that trade must be restricted in order to save domestic jobs. As a free-trader, how would you counter this argument?

2) The Regional Clear Air Incentives Market (RECLAIM) program is an emissions trading program for nitrogen oxide NO_x) and sulfur oxide (SO_x) emissions in Southern California. One early trade of these “pollution” permits was valued at $1.27 million for 1,700 tons of NO_x. One element of this program is that the quantity of allowable pollution per permits decreases over time. So for example if a permit allows 1000 tons of NO_x emissions in 1994, it may only allow 500 tons of emissions in 2004. Carefully describe the factors that would influence the market value of RECLAIM pollution permits over time. Would you ever expect the market value of permits to fall to zero? Why or why not?